Construction & DevelopmentWarranty
Synonyms: Defect Warranty، Builder's Warranty، Developer Warranty، Latent Defects Cover
Last updated: 2026-09-25
Short Definition
A warranty in real estate is the statutory or contractual obligation of a seller, developer or contractor that the property is free from defects reducing its value or usefulness, and to repair or compensate for defects that appear within a set period after handover.
Overview
A warranty in real estate is the statutory or contractual obligation of a seller, developer or contractor that the property is free from defects reducing its value or usefulness, and to repair or compensate for defects that appear within a set period after handover. In Saudi law it is not merely a commercial promise from the developer: it comes from several sources, namely the statutory defect warranty, a ten-year structural liability, mandatory insurance and suppliers' equipment warranties.
The first source is the defect warranty in the Civil Transactions Law: the seller guarantees the property against any defect that reduces its value or use, even if unaware of it, and the buyer may rescind or keep the property with a price reduction (Art. 338); the claim is not heard after 180 days from delivery unless the seller committed to a longer period (Art. 344), and the warranty may be limited or extended by agreement unless the seller deliberately concealed the defect (Art. 343). The second is the joint liability of the supervising designer and the contractor for ten years from the occupancy certificate for total or partial collapse and hidden defects threatening the building's soundness; any clause excluding it is void (Art. 29 of the Implementing Regulation of the Saudi Building Code Implementation Law). The third is mandatory inherent defects insurance, imposed by Council of Ministers Decision No. (509) dated 21/9/1439H on contractors in non-governmental projects, running 10 years and activated after the occupancy certificate. The fourth, in off-plan projects, is the chartered accountant's retention of 5% of construction cost for one year after completion to fund defect repairs, unless the developer provides an inherent defects insurance policy.
In practice, before buying ask what the warranty covers, for how long, who the guarantor is (developer, contractor, insurer or supplier) and how to claim. Keep the warranty certificates for equipment such as air conditioners, lifts and water heaters, since their periods differ from the structural cover.
⚖️ Legal Basis
Civil Transactions Law issued by Royal Decree No. (M/191) dated 29/11/1444H: Art. 338 (seller's defect warranty and buyer's options), Art. 343 (warranty may be limited or extended unless the seller deliberately concealed the defect) and Art. 344 (180-day period for hearing a defect claim). The Implementing Regulation of the Saudi Building Code Implementation Law (Art. 29: joint ten-year liability of the supervising designer and the contractor from the occupancy certificate; exclusion clauses void), based on Art. 8 of the Law as amended by Royal Decree No. (M/15) dated 19/1/1441H. Council of Ministers Decision No. (509) dated 21/9/1439H obliging contractors in non-governmental projects to insure against inherent defects. The Off-Plan Sale and Lease Law (M/44 dated 10/3/1445H), Art. 14, and its Implementing Regulation, Art. 31.
💡 Practical Example
Fahd bought a new villa in Riyadh from a developer for SAR 1,600,000. Four months after handover, water leaked from the AC drains and damaged the gypsum ceilings; he sent the developer written notice with photos the same day, well within the 180-day window, and the developer repaired the damage at its own cost of about SAR 18,000. In the sixth year a crack appeared in a concrete beam that an engineer judged to threaten the building's soundness; since this fell within ten years of the occupancy certificate, Fahd contacted the insurer that issued the inherent defects policy linked to the building permit, in addition to his right to pursue the supervising designer and the contractor under their joint liability.
⚠️ Common Mistakes
- ✗Assuming the warranty is only what the developer writes in its brochure, and overlooking the statutory defect warranty, the ten-year liability and the mandatory insurance.
- ✗Letting the 180-day window pass without written notice of the defect, after which the claim is not heard unless the seller committed to a longer period.
- ✗Accepting a clause that exempts the contractor or supervising designer from liability for structural safety; such a clause is void by law.
- ✗Not keeping equipment warranty certificates and invoices, the loss of which can forfeit free repairs.
- ✗Confusing the short finishing warranty with the long structural cover and claiming one under the other's terms.
🌍 International Differences
In the UAE and Egypt, the civil codes impose a ten-year (decennial) liability on the contractor and engineer for building collapse and defects threatening safety. In Turkey, the Code of Obligations governs defects in immovable works with a shorter limitation period that is extended where the contractor is grossly at fault. Notably, Saudi Arabia's Civil Transactions Law contains no specific decennial-liability article in its construction-contract chapter; the ten-year liability comes instead from the Saudi Building Code Implementation Law and its regulation, backed by a mandatory ten-year inherent defects insurance, a model also found in markets such as France.
FAQs
How long is the defect warranty when buying property in Saudi Arabia?▾
A defect-warranty claim is not heard after 180 days from delivery unless the seller committed to a longer period or acted fraudulently. Defects threatening the building's soundness are covered by the supervising designer and contractor for ten years from the occupancy certificate.
Is inherent defects insurance mandatory?▾
Yes. Council of Ministers Decision No. (509) of 1439H imposed it on contractors in non-governmental projects, and the Balady platform requires it before a building permit is activated. It runs for 10 years starting after the occupancy certificate is issued.
Can a developer stipulate that it gives no defect warranty?▾
The seller's defect warranty can be limited by agreement unless the seller deliberately concealed the defect. However, any clause exempting the contractor or supervising designer from the ten-year liability for structural safety is void.
How does the off-plan program relate to defect warranty?▾
The chartered accountant retains 5% of construction cost in the escrow account for one year after completion, and REGA may use it to repair defects if the developer does not start repairs within five days of notice. The developer may replace this with an inherent defects insurance policy.
Does the warranty cover air conditioners and appliances?▾
Equipment is usually covered by the supplier's or manufacturer's warranty, with periods that differ from the structural cover. Obtain the warranty certificates and purchase invoices at handover and keep them.
